Tags: Fahmy | Fed | taper | rates

Zor Capital's Fahmy: 'No Fed Taper' in 2013

By    |   Tuesday, 27 August 2013 11:38 AM

Federal Reserve Chairman Ben Bernanke may want to start tapering Treasury bond purchases soon, but he will not do it in 2013 after all because he wants to go out a winner when his term expires in January, predicts Joe Fahmy, managing director of Zor Capital.

Recent surveys of economists and experts have leaned toward the expectation the Fed may begin to trim its $85 billion bond purchases, designed to prop up the economy, as early as September.

"I don't think he's going to come this far, and pull the plug and cause a mess for the next Fed chairman," Fahmy told Yahoo. "He may still leave a mess but, I say, he's at least going to go out on a high note."

Editor’s Note:
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The reason for Fahmy's conviction? Some government economic data does not yet support pulling back on Fed stimulus. The jobless rate, for instance, still does not meet Fed goals, even though some other recent economic reports have been more positive.

Fahmy envisions a positive response from stock investors who will applaud continuation of the Fed's policy of artificially low interest rates.

"So I say no taper, and I think the market goes to new highs by the end of the year," he told Yahoo.

Stock market volatility is being fed both by concerns about the possibility of Western intervention in Syria and the uncertainty about the Fed tapering timetable.. CNBC reported

Nick Lewis, head of risk at London Capital Group, told the network that low trading volumes were feeding the instability on Tuesday.

"Any move is exaggerated in these thin markets," he said. "Everyone's studying the economic data but it's a confusing picture, and hard to tell how 'good' for stocks the news really is."

Author and former Lehman Brothers trader Lawrence McDonald, who puts out the "Bear Traps" investor newsletter, suggested on Twitter that financial markets are conflicted.

"One is mispriced," he tweeted. "Gold miners [Market Vectors Gold Miners exchange-traded fund: GDX] are telling us the Fed will hold off on a QE [quanititative easing] taper. Long bonds [iShares Barclays 20+ Year Treasury Bond: TLT] are saying October taper.

Editor’s Note: Will This Video Get Obama Fired? See the Evidence.

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Federal Reserve Chairman Ben Bernanke may want to start tapering Treasury bond purchases soon, but he will not do it in 2013 after all because he wants to go out a winner when his term expires in January, predicts Joe Fahmy, managing director of Zor Capital.
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2013-38-27
Tuesday, 27 August 2013 11:38 AM
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